OECD’s Contribution to International Development: Knowledge Sharing and Policy Coherence

In this time of economic stress, when attention is focusing on avoiding worst-case scenarios from the global financial crisis, putting our public finances back on a sustainable footing, and rebooting growth and employment, our duty is to not forget the development agenda. We need to double our efforts to continue supporting less developed countries, not only with policy specific actions, but also to improve the development impact of all of our policies. This is in our best interest as our future is closely interlinked to the future of the less developed countries.

Let me first commend the Centre for Global Development’s great work – and I know what I am talking about since I served on its Board for many years. Your Commitment to Development Index has helped policy makers and advocacy groups around the world by raising awareness on the range of policies that can have an impact on development, and by placing the contribution of aid in a broader context. Indeed, aid is just one of seven policies tracked by the Index along with other important ones such as trade, investment and migration. Thank you Owen for co-organising this side event.

We all know that the policies of advanced countries – beyond aid – matter for the development of low-income countries. For this reason, the OECD tries hard to assess the combined impact of such policies and to promote coherence among them. Policy-coherence for development is an important tool in this regard.

Our goal is clear: we support governments in designing better policies and making reforms happen. But we also know the importance of mutual learning. Sharing knowledge on the policy experiences among a wider group of countries beyond the advanced economies will be key to understanding what policies work in which conditions.

This twin-track approach – policy coherence for development and knowledge sharing on good policies – is at the heart of the OECD Strategy on Development that Ministers approved last May.

The Strategy calls upon the OECD to enhance its role for development. This means:

Giving development a more prominent focus in all our work,

Working more closely with partners across the globe, and

Making contributions to help promote a development-friendly international architecture.

This is already happening.

The OECD has been requested to contribute to global processes on development including the G20. Our work on aid effectiveness has culminated in The Busan Partnership for Effective Development Co-operation. We have also deepened our collaboration with developing countries on a wide range of policy areas. In 2011, more than 3,800 representatives from nearly 150 non-member countries participated in OECD’s work. That is more than four times the number of countries who are members of the OECD!

Our collaborations go beyond governments. We have active relationships with private sector, labour groups, and foundations with strong interests in development. Our OECD Parliamentary Network disseminates the OECD’s work to MPs and helps us to obtain their views on our analysis. I’d like to thank the Africa All UK Parliamentary Group for their kind invitation to this joint side event. I compliment your efforts to look at aid and other public policies to better understand the impact of the United Kingdom on development.

OECD’s “bread and butter” are public policies and data. This is where we can help developing countries the most. To do so, we are working closely with partner organisations and with our members’ implementing agencies that have a presence in the field. To this end, we will launch a Knowledge Sharing Alliance in January.

Let me mention two specific policy areas, among many others, where the OECD contributes to making a difference: taxation and skills.

Tax and development

Here in the United Kingdom, I do not need to highlight the importance of ensuring that multinationals pay their fair share of tax. David Cameron, as the next chair of the G8 is already the champion of our work to address tax base erosion and profit shifting (what we at the OECD call BEPS). This means developing new inclusive rules for international taxation. In doing so, we will draw on our experience of simplifying transfer pricing rules as tested recently with Ghana, Rwanda, Kenya and Vietnam, to name a few.

We may soon be able to say that the era of bank secrecy is over. But we have made sure that this major change also benefits developing countries: among the 117 members of the OECD Global Forum on Transparency, we now have more than 30 developing countries! Many are also joining the Multilateral Convention on Mutual Assistance that we opened to non-OECD countries three years ago. This is leading to the automatic exchange of information.

We are also increasingly active on fighting illicit financial flows, which are thought by some to equal about USD 1 trillion a year, or 9-10 times more than all ODA from OECD member countries. In the UK, efforts are yielding impressive returns: estimates suggest that up to 20 USD is potentially tracked and frozen for every 1 USD spent on investigating the transfer of illicit funds from the developing world to the UK. And a significant proportion of the recovered funds is repatriated to developing country of origin.

In 2010, we launched an initiative named the “Oslo Dialogue,” aimed at enhancing interagency co-operation to better fight tax crime, money laundering and corruption. We will work closely with developing countries to train tax agents, prosecutors and financial police to help them fight these scourges.

Jobs and skills

Jobs and skills are also a major concern to governments, both in advanced and developing countries.

With the global economic crisis still continuing, more countries are examining structural reforms to unleash growth, including in the areas of labour markets and skills. To support OECD policy makers, we developed a Skills Strategy to help countries identify the strengths and weaknesses of their national skills systems, benchmark them internationally, and develop policies that can transform better skills into better jobs, economic growth and social inclusion, including greater gender equality.

Developing countries are facing similar challenges. In Africa, an estimated 40 million young people are currently under-employed or in poor employment. Like Europe, Africa needs more growth with better jobs. Within the next 10 years, 130 million young Africans will be leaving the education system. In many countries, we are also observing a significant mismatch between the skills in the labour market and the demands of potential employers. For example, in Egypt, 1.5 million youth are unemployed while 600,000 jobs need to be filled. In South Africa, the situation is even more extreme: there are 800 000 jobs unfilled with 3 million young people neither employed nor in training. We are now examining the major challenges relating to the demand for skills, as countries seek to develop private sector activities better adapted to global value chains.

These are becoming global challenges.

For these reasons, G20 Leaders asked the OECD, World Bank, ILO and UNDP, to develop a set of skills indicators for developing countries and to support them in designing and implementing their skills strategies.

These indicators are now being tested in Bangladesh, Benin, and Malawi. With continued support, this effort could lay the basis for identifying better skills training and job policies in the developing world.

These are just two examples of how the OECD is re-tooling itself to better work on development. I should also mention our initiative onGreen Growth, based on a Green Growth toolkit that we developed in the G20 context.

This afternoon, I will launch the 2012 Development Co-operation Report which this year focuses on “Lessons in linking sustainability and development”. Here too we seek to account for the impact of environmental and green growth policies on developing countries.

Contributing to International Discussions on a Development Framework in a Post-2015 World

Ladies and gentlemen:

We are committed to supporting the international community’s effort to shape a new development framework for global development. Armed with a cluster of development institutions with decades of experiences and a wide array of policy tools, we are ready to join the deliberations on the kind of post-2015 world we all want to achieve.

How might the OECD contribute? I believe we have much to offer. Let me mention three.

First, there are growing calls at the UN and elsewhere to put the broad notion of “well-being” at the core of the post-2015 development agenda. This would define a whole new agenda for measuring progress. Our Better Life Index, already ten years old, is an answer to this call. This approach is also highly relevant for developing countries. Reducing poverty remains an imperative to raise material well-being. But meeting other basic needs is equally important. These needs relate to adequate housing, health, education, security, a pollution-free environment, clean water, support from the community – all these delivered by non-corrupt institutions.

Second, I just spoke about skills and the quality of education. Access to education has improved tremendously in developing countries. But it has not always translated in better targeted skills or increased social mobility. To be effective, these policies need to be measured, tracked and evaluated. The OECD’s Program for International Student Assessment, or PISA, provides a comprehensive and rigorous international assessment of learning outcomes and is being used in nearly 70 countries, including in 31 non-member countries. In Latin America, for instance, PISA results for 8 countries have provided evidence that most students from poor households have failed to develop basic reading skills. In Brazil, PISA has used both national and international benchmarking to focus efforts and to establish tools to improve their education system, which has resulted in an increase in average PISA scores for 15-year-old students of 13 to 30 points in reading, mathematics and science.

The third concerns resources. The composition of resources for development is changing. To capture this change, the OECD will be revising and updating its statistics. It will pay particular attention to new and innovative financing instruments and the increasing flows from emerging economies. As we reported earlier last year, ODA declined for the first time since 1997, by 2.7%. Thus, these other flows become even more important.

Conclusion

My bottom line is simple: the OECD can assist governments in improving their policies to better contribute to international development and monitor closely the outcomes of actions. These assessments will provide us with valuable guidance on whether we are doing all that we can to achieve the shared goal of more inclusive and sustainable growth in both developing and developed countries.